COST PLUS PRICING THE NEXT RIGHT THING FOR HEALTH PLANS. KATHLEEN SULLIVAN, FIRST FLORIDA INSURANCE BROKERS MICHAEL R. VAN GERPEN, ELAP SERVICES

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1 COST PLUS PRICING THE NEXT RIGHT THING FOR HEALTH PLANS. KATHLEEN SULLIVAN, FIRST FLORIDA INSURANCE BROKERS MICHAEL R. VAN GERPEN, ELAP SERVICES

2 WHAT WE KNOW? Page 2

3 PUBLIC ENTITIES BEAR AN EXTRA BURDEN FIDUCIARY ROLE TO TAX PAYERS FIDUCIARY ROLE TO EMPLOYEES

4 S O, H OW DO WE PAY F O R H EA LT H C A R E TO DAY

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6 HEALTHCARE PURCHASING ENVIRONMENT NO PRICES PROVIDED WHEN SERVICES RENDERED NO CONFIRMATION IF CERTAIN PROCEDURES OR SERVICES WILL BE COVERED VIRTUALLY NO SHOPPING AVAILABLE YOUR BILL IS MAILED TO YOU 30 DAYS AFTER SERVICE, OFTEN WITHOUT THE ABILITY TO AUDIT. COULD THIS EVER RESEMBLE A PUBLIC ENTITY PURCHASING POLICY?

7 I S T H E P P O N E T W O R K S E R V I N G YO U R B E S T I N T E R E S T?

8 IN SW FLORIDA, HOW MUCH DOES A COMPUTED TOMOGRAPHY (CT) SCAN COST? Avg. Billed Average Cost Average Payment from Medicare Cost Ratio (all CT Scans) Lee Memorial $4,218 $55 $ NCH Downtown Naples Gulf Coast Medical Center $3,235 $118 $ $3,963 $65 $ Departmental statistics are obtained from a hospital's most recent Medicare cost report. Ratio = Total Annual Costs divided by Total Annual Billed Charges, within that Department.

9 GETTING A 50% OR EVEN 60% DISCOUNT OFF THE CHARGEMASTER PRICE OF AN ITEM THAT COST $13 AND LISTS FOR $ IS STILL NO BARGAIN. - EXCERPT FROM TIME MAGAZINE

10 H O S P I TA L M A R K- U P 300-2, % H A R D T O B E L I E V E?

11 PROTECTING FLORIDIANS AGAINST HOSPITAL PRICE GOUGING

12 207% 126% 263% TOP 15 STATES IN THE U.S. WITH HIGHEST 451% 269% 220% 448% 195% 251% 426% 166% 204% 315% 319% MARKUPS 202% 166% 202% 197% 244% 237% 214% 264% 256% 263% 294% 412% 280% 189% 200% 327% 583% 345% 316% 280% 355% 140% 247% 309% 339% 366% 317% 430% 321% 316% 387% 314% 422% 338% 398% 344% 206% 136%

13 GOVERNOR SIGNS LAW HB 221, APRIL 14, LAW SHIELDS PATIENTS FROM SURPRISE MEDICAL BILLS APPLIES TO PPO PLANS PROTECTS MEMBER WHO GO TO HEALTHCARE FACILITY IN THEIR NETWORK AND INADVERTENTLY RECEIVE SERVICES FROM A NON-NETWORK PROVIDER OPPOSED BY ANESTHESIOLOGY & RADIOLOGY GROUPS 2. INCREASES PRICE TRANSPARENCY 1 ST STEP TOWARDS PRICING TRANSPARENCY

14 THE HOSPITAL CONTRACTS RELINQUISH YOUR AUTHORITY TO A THIRD PARTY PAYOR GIVING THEM CONTROL NEGOTIATED A CONTRACT WITH A HOSPITAL THAT YOU WILL NEVER SEE AND TURNED OVER TO A THIRD PARTY 55-60% OF YOUR ANNUAL CLAIMS VOLUME IS MADE OF HOSPITAL CLAIMS.

15 SUMMARY BILLING T R A N S PA R E N C Y? R E A S O N A B L E C H A R G E S? A C C U R A C Y? THERE ARE LIMITED AUDIT PROVISIONS IN PPO CONTRACTS!

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18 H OW TO S E I Z E C O N T R O L OF YO U R H E A LT H C A R E S P E N D I N G?

19 SIMPLY STATED TREAT YOUR MEDICAL COSTS IN THE SAME MANNER THAT YOU WOULD ANY OTHER BUSINESS COST

20 EMPLOYER SMART CONSUMERISM TOOLS TECHNOLOGY TOOLS CASTLIGHT, HEALTHCARE BLUE BOOK, COMPASS, CHANGE HEALTHCARE, HEALTHSPARQ, DELPI MCO S - AETNA, CIGNA, FL BLUE, UHC, AVMED... PLAN INCENTIVES SHARING IN FINANCIAL SAVINGS BACK TO EMPLOYEE ELIMINATE CO-PAYS ON RX AND OFFER AT % UP TO A MAX OUT OF POCKET COSTS ALL ELECTIVE PROCEDURES REQUIRED TO CONSULT OR SUBJECT TO PRE-CERT PENALTY

21 IMPLEMENTING A COST PLUS PLAN DESIGN SELF-FUNDED EMPLOYERS OFFER PHYSICIAN ONLY NETWORK. NO NETWORK FOR HOSPITAL S EMPLOYEES CAN GO TO ANY HOSPITAL! DEVELOP PLAN LANGUAGE THAT CONTAINS CLEARLY STATED AND RATIONAL LIMITS OF REIMBURSEMENT BASED ON THE PROVIDERS ACTUAL COST OF DELIVERING A SERVICE NOT THE INFLATED BILLED CHARGES INSTALL A PROCESS TO ENSURE CLAIMS ARE AUDITED FOR ACCURACY MEASURE PERFORMANCE, DETECT TRENDS AND IDENTIFY OPPORTUNITIES

22 COST PLUS CASE STUDY CITY OF MARION, INDIANA 2012, $5.2 MILLION DEFICIT STANDARD & POOR BOND RATING DROPPED TO BBB IMPLEMENTED THE COST PLUS STRATEGY WITH ELAP SERVICES OVERALL, WE WERE ABLE TO SAVE $2.7 MILLION LAST YEAR THROUGH THE PROGRAM ELAP HELPED US BUILD. WAYNE SEYBOLD, MAYOR REBUILD DEPLETED CASH RESERVES AND RE-INVEST SOME MONEY BACK INTO THEIR EMPLOYEES AFTER JUST ONE YEAR ON THE PROGRAM, STANDARD & POOR UPGRADED THE CITIES BOND RATING FROM BBB- TO A-

23 TREND STUDY MOVING TO COST PLUS FL NON-PROFIT Saved $286,746 in fixed fees before effective date of coverage!

24 IN SUMMARY TOP COST CONTAINMENT STRATEGIES BASED ON SIZE Fully-Insured (2-250 EE s) Expand use of user friendly transparency tools Incentivize! Implement pre-certification penalty Add Narrow or Restricted Networks Self-Funded (250+) Consider all items listed under Fully- Insured Amend SPD to include Cost Plus Pricing

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